[A]usterity and calmer financial markets do not amount to ending the crisis. Rather, they point to the emergence of a German eurozone. Commentators who have protested that crisis leadership in the eurozone has been weak have been wide of the mark. In practice, austerity is transforming the periphery into a vast East Germany: a zone of weak growth, low wages, poverty and no economic dynamism. There will not even be some of the fiscal transfers, amounting to perhaps €60bn annually, that have supported East Germany.
Equally wide of the mark have been those who stress the importance of an overarching state in charge of fiscal policy, or of a banking union to lessen the risks of banking collapse in the eurozone. Germany will not accept either a fiscal union or a banking union that would use its taxpayers' money to subsidise others in the eurozone. These debates have merely distracted attention from Germany's determination to impose rigid fiscal discipline on "delinquents" and to monitor only the biggest banks in the eurozone, leaving smaller German banks out of the net.
Leaving aside what I think is a misleading and false synecdoche on Lapavitsas' part, reducing the Eurozone's policies to Germany when it isn't at all clear that Germany dominates the Eurozone the way he assumes, is he aware that in order to receive the fiscal transfers that East Germany received it had to dissolve its sovereign existence and accept whatever a basically West German government demanded? The idea that East Germany, whether as a single entity or as five-and-a-half Länder, would have been able to enact whatever reform policies it wanted in the context of a German currency union with West Germany paying for everything, is ludicrous. Was there any alternative to the West German-determined policies? How can a Greece that enjoys less sympathy expect anything more?